DLG Legal Services, the company set up by Direct Line and Parabis Law, has been granted Alternative Business Structure (ABS) status and will begin operating from 3 March.
The launch will enable the insurer to extend the range of legal services it offers
However, Legal Futures has reported that the Solicitors Regulation Authority (SRA) has attached a number of conditions to the operation's ABS licence.
DLG has been given a waiver from the separate business rule, for prohibited separate business activities currently undertaken by Direct Line, including cost drafting and claims handling.
The SRA also requires that the branding and logo for DLG Legal Services can be easily identified as a separate business from Direct Line' insurance arm.
In addition, when work is transferred from the group to its legal arm, a client must be informed that they are now subject to the protection of the SRA.
The Royal Bank of Scotland remains a major shareholder in Direct Line, with a 28.5% stake after selling 300 million shares in the company in September 2013.